On 'good information'

They stop you on the sidewalk, knock on your door, or call at dinnertime offering to slash your electric or gas bill. So you’d think energy service companies—ESCOs for short—would be thrilled that the state wants to spread the good word about their products to New Yorkers stuck with some of the nation’s highest utility bills.

But ESCOs are resisting a state plan to give customers more data about their prices. They also complain that state rules keep them from competing against the default plans offered by utilities like Con Edison and National Grid.

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The state Public Service Commission in February ordered ESCOs to provide historic price information that it can then post on a state website. The commission also gave utility companies until August to set up web pages that will let customers compare utility and ESCO price histories.

The commission hopes the disclosures will be more help to residential utility customers than its current website, which includes ESCOs’ promised prices and phone numbers or links to their signup pages.

The commission admits its current ESCO site isn’t much help.

“[N]either buyers nor sellers have good information about prices,” it wrote in the February 24 order, adding that the retail markets for residential consumers “cannot be considered to be workably competitive.”

More information is good, says Craig Goodman of the National Energy Marketers Association, which represents ESCOs and other energy companies in New York.

“You can never argue against disclosure,” he said. “The more informed that consumer is, the better that consumer is. We need the most educated consumers we can get.”

One ESCO fear is that the utilities’ gas and electricity buying strategies won’t be reflected in the published price data. For example, price hedging allowed Con Edison to cut its per kilowatt-hour rates for a time in February, when market prices were high. Such strategies make the spot prices of Con Ed and other utilities “appear cheaper than they are,” said Goodman. “Consumers, believe it or not, are oddly misled.”

Another ESCO gripe is that the disclosure plan doesn’t weigh the value of level-price guarantees, rebates, gift cards, airline miles and other premium goodies they say have real value to customers. ESCOs are also upset that the state wants to repeal rules that give new signups a two-month, 7 percent discount and require utilities to promote ESCO services to new customers.

The ESCOs make their complaints in filings before the commission, which is mulling the matter.

ESCOs sell 72 percent of the electricity used by businesses in the state, but only 30 percent of the electricity used by residences, according to state data released in December.

A big problem for the ESCOs in the residential market is that they seem to charge more than utilities. A Public Utility Law Project study of ESCO pricing in National Grid’s upstate territory found that between August 2010 and July 2012, residential ESCO customers paid $400 more for electricity and $200 more for gas than they would have paid under the utility’s default plan.

Goodman says ESCOs will flourish—and customers will benefit—when National Grid, Con Ed and other utilities stop selling electricity and gas and focus on their monopoly business of maintaining wires, transformers and pipelines.

“Monopolies should not be in a competitive marketplace,” he said.

He and others in the energy business foresee a day when consumers have a choice of power and gas pricing plans. Environmentally conscious people might choose solar or wind power, and people with electric cars might pick a time-of-use plan that lets them charge their batteries during off-peak hours when electricity is cheapest.

The utilities—which make no profit selling electricity and gas—say they have little problem with customers migrating to ESCOs.

“We are OK with the customers leaving. We are indifferent,” said Ivan Kimball, Con Edison’s vice president for energy management.

But Con Ed feels that for now, it needs to keep a hand in the business of selling gas and electricity. Kimball explained the concern this way: If the ESCOs run into financial trouble and can’t pay generating companies, generators will shut down. If ESCO defaults shut down too many generators, Con Edison expects to be blamed for failing to keep the electric system running.

“We all know who is going to be in the paper if there is not enough supply in the city,” Kimball said.

He added, “It’s an obligation we don’t see going away—making sure the system is reliable and has sufficient resources.”

Bill Sanderson is the author of New York Power and Light, a blog about public utilities.